Former trustees differ on proposal

Former TECT trustee Bruce Cronin disagrees with the proposal by TECT to end the issuing of the TECT cheque. File photo.

Former TECT trustees have come out both for and against the proposal to scrap the TECT cheque, while submissions on the proposal have exceeded 2000.

In a letter distributed to TECT, Trustpower, and local media, former trustees Bruce Cronin, Michael Cooney, and Ken Collings expressed their belief the current trustees would be failing their ‘fiduciary duty' to consumers if they proceeded with the proposal.

Bruce, who chose not to run for re-election in 2016 after 20 years as a trustee, says he would never have agreed to this proposal.

'The trust was set up to benefit consumers, and it's worked pretty much that way for the last 25 years.

'The trustees were elected to protect the interests of the consumers, and they are not. To put it bluntly, they are stealing assets from the consumers to put into a charitable trust, and are paying out a pittance of what those assets are worth.”

However, former trustee Frances Denz sees the proposal as ‘protecting the best of TECT against the winds of change'.

She believes as Trustpower has evolved beyond being a local company solely providing electricity services, TECT cheques are going to different customers from those envisaged by the deed (such as those receiving gas and internet services).

'TECT has also changed. It does not rely solely on Trustpower for income anymore having sold a lot of shares some time ago,” she says.

'We were always worried the good times for the dividends might slow at some stage because the dividend stream from Trustpower to TECT wasn't under TECT's control, but rather a Wellington investment company, Infratil, which gets over half of Trustpower profits.

She says if Infratil was to sell its shares to another shareholder that wanted Trustpower to turn into more of a telephone company, for instance, then dividends might slow or cease to enable the necessary investment.

'Then the TECT benefit to the community would also stop.”

She suggests Trustpower reduce their prices by around 20 per cent for Tauranga customers if the proposal goes through, to account for the lost TECT cheque. She also hopes the new charitable trust doesn't become ‘a plaything of the big boys in town'.

'Currently the TECT Deed says that no elected member of local government or employee of local government may be a trustee of TECT. This was a wise condition to ensure local politicians did not meddle.

'I would like to keep that criteria and also extend it so that no trustee of any other funder may be a TECT trustee. This will ensure that any applications are independently examined and we don't have a cabal of grey men in suits controlling all charitable funds in the area. TECTs funds are huge. We must keep them safe for the ordinary person to benefit.”

TECT chair Bill Holland says Bruce and other former trustees are perfectly entitled to comment against the proposal.

'I would note it's at odds with former chairs Noel Pope and Jan Beange, both former mayors of Tauranga, who have both written letters of support for this proposal.”

He says if everyone who provided feedback was opposed to the proposal, then there would be no need for a vote.

'But we've had many people writing in support of the proposal. As of last Friday when we had 2000 submissions, the clear majority was in support.

'I don't doubt there will be more who disagree coming in, but once the submissions close we will consider what people have said in regards to whether we modify the proposal that we put forward to a vote.”

THE LEGALITIES OF THE PROPOSAL

Questions have also been raised about how much money has been spent on legal advice by the trustees in preparing the proposal.

'They've spent all this money on getting legal opinions, and I believe they should make those opinions public, because they've used beneficiaries' money to get those opinions,” says Bruce.

'But the trustees are adamant they're not going to do that.”

When SunLive asked Bill how much the trustees had spent seeking legal advice, he said he ‘honestly didn't know'.

In response to Bruce's comment, Bill says the trustees also had to pay for legal advice on whether they were required to tell beneficiaries about the legal advice they took.

'The question is: what information is a beneficiary entitled to? A fundamental thing to consider is what the person is seeking the information for. Is it because the trustees are being lax or deceptive?”

He says initial proposal would have modified the existing trust, but lawyers suggested that couldn't be done.

'Our legal advice said we could do it, which we had peer-reviewed by another high level law firm at great expense, and they said yes, although they were more equivocal.

'Then Trustpower went to Russell McVeagh who said it couldn't possibly be done. That was around a year ago.”

The trustees then adjusted the proposal to its current form, which Bill says ‘effectively winds up' the consumer trust, and focuses entirely on the charitable trust that already exists.

'If there is a power in the trust deed to vary the trust, you can do so. Clearly in the TECT Trust Deed, there is the power to vary the terms. But overriding that, and not written into the deed, is the ‘substratum' principle, which means you can't change the trust radically beyond the scope of original trust's purpose,” says Bill.

'Russell McVeagh alleged our first course of action would breach the substratum of the trust, but our current proposal does not. If anyone broke the substratum rule, it was the trustees who established the charitable trust 12 years ago.”

The TECT Trust Deed, which can be read here, outlines the powers of the trustees, and includes the option of distributing dividends for the benefits of consumers as cash payments, as well as goods and services, or as funding for community initiatives likely to benefit consumers.

Submissions on the TECT proposal close at 4pm on March 1, and can be made by eligible consumers via the TECT website.

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10 comments

Really?

Posted on 21-02-2018 07:21 | By Bob the Builder

Is this the same lady that is Executive Director of a business where current trustee, Ron Scott, is the executive director???


At last, INTEGRITY, independent and informed!

Posted on 21-02-2018 08:14 | By Murray.Guy

At last, INTEGRITY, independent and informed! Anyway you try to paint it, these gentlemen have to be providing the most credible response to date! Incremental theft by stealth! Can't help but wonder how folk would feel if an unrelated party, a bureaucrat, tried to misappropriate their 'air points', their AA rewards, their Flybuys,....


The law and interpretation

Posted on 21-02-2018 09:32 | By backofthequeue

The TECT trustees may well have a legal opinion that serves their purpose however ultimately the High Court will decide the substance of that interpretation and how it fits with the Trust Deed which repeatedly states the benefits will be made available to the consumers. Before this court action we have a forthcoming Trustee election and that in itself will provide an interesting outcome as to how consumers view this proposal and its promoters.


tisi

Posted on 21-02-2018 10:01 | By simple.really

Writing on the wall folk, its a done deal


Theft and corruption

Posted on 21-02-2018 12:28 | By maildrop

He's right. The current Trustees are proposing theft of consumer funds. It makes you wonder what is motivating them. Fingers in pies. They didn't even consult and offer different options. Arrogance again.


Out of touch

Posted on 21-02-2018 12:46 | By The Sage

Bob the builder is well onto this. So pleased Michael Cooney, Bruce Cronin and Ken Collings have spoken out with the history of what was meant to happen. My personal opinion is that a few of the "old boys" have gotten together over a drink and hatched this plan. These people are well out of touch with the majority of the population who have come to rely on the cheques to put towards their rates. I very much doubt that this proposing this ever have to budget for rates. The "Charitable Trust " brigade are out of touch with the real world.


Wonder

Posted on 21-02-2018 13:03 | By rastus

Having elected members publicly working against your best interests seems to be the way things happen today - meet behind closed doors - set up a system that suits their agenda and then bribe the populace into thinking they are doing whatever in your best interests - I think we already have worked out that this is going to be a rort and I fear their cunning maneuver will most likely succeed despite the immorality of it all


Two sides to every story.

Posted on 21-02-2018 14:23 | By Noel Silver

Somewhere along the line the Tect Consumers are not being given a full picture of the future options that may be available. Why are we being presented with option only?. This brings into question the real motives of the Tect Trustees. This process that they started has already reduced the Trust power Share Value, and accordingly Tect's large holding of Trust power Shares has dropped by over $50 million. We know know that if Tect was wound up each consumer would get $14000.00 so maybe that is an option. Maybe Trust Power could offer a version of Tect's offer. When this situation is finally resolved, I wonder if there will be any resignations, as this is starting to look like a Fletcher's mismanagement story. By Noel


It's a grey suits rort

Posted on 21-02-2018 15:17 | By CC8

They lied in their campaign statements and are still lying to the people they represent. They prey on vulnerable people, in dire circumstance. Offering short term gains for long term losses is a common ploy . The haves like to make sure that the have-nots never rise above . This needs to be stopped NOW and a new election held before any changes are made to the trust deed. Elected members should be required to keep to their election promises/statements.


change of tune

Posted on 21-02-2018 16:09 | By wazzock

funny how Ron Scott and Frances Denz were trying to stop any charitable benefits being paid out back in 2011....it must be all part of their ACT....


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